Why has online shopping failed to fulfill its promise? (1993)

[Note: In an effort to get home before the chaos called “Nashville drivers in the snow,” an unfinished version of this post was published earlier this afternoon. This version has been changed somewhat from that earlier version.]

Preparing for an office move next week (from one floor to another), I’ve been emptying out lots of stuff I used to collect before there were digital cameras and Evernote. For some reason many years ago, I tore out and saved the article displayed at the bottom of this post, from the June 21, 1993, issue of the Wall Street Journal. The article, written in the style still rigidly practiced by Wall Street Journal writers, ping-pongs back-and-forth between quotes that take opposing positions on why online shopping has failed to “fulfill its promise.”

Reading it in 2011, 18 years after it was written, is hilarious. For example, a self-confessed “online junkie” says he’s “never bought a thing online” because merchandise “isn’t as alluring as the glossy pictures in catalogs.”

But wait; it’s not just hilarious, it’s informative. Just read this:

“Online shopping by computer is one of those ideas whose time has never come — and perhaps never will. Seven years after CompuServe Inc., a unit of H&R Block Inc., started its Electronic Mall, on-line services sell less than $100 million of merchandise a year. The home-shopping television channels, started at the same time, sell more than $2 billion a year.”

Wait, maybe it’s not so hilarious. Let’s step back and read the article again. With our two decades of insight, we should realize why the article seems so amusingly wrong at first — but after the giggles, think about it.

In 1993, the graphical (what-you-see-is-what-you-get) browser-based internet as we know it today did not exist. The ability to hop between CompuServe’s Electronic Mall and Prodigy and America Online and whatever Time Inc was experimenting with in Florida, did not exist. Indeed, one of the reason for its failure (at least, in 1993) was the need to do just such hopping. It “failed” early because companies like CompuServe wanted it all for themselves (monopolies are good, if you have one, I guess) — they wanted to own the customer and the Mall. They wanted to charge for subscriptions, transactions and virtual real-estate.

Their books provide the context to understand why it was easy in 1993 to believe that online shopping should be successful, but why it took another couple of decades for it to go from zero to where it is today. But where it is today, is still not all that great, considering its promise. While massive and rapidly growing, online retail is a relatively small (around 4-5%) part of total retail sales (you can track U.S. Census data related to retail ecommerce and overall retail trade here). Perhaps, in Kelly’s & Johnson’s books, can also be found the reasons for why, despite being able to understand the reality, and not just the promise of online shopping, we’re still wondering what it will take to “get there” — or even if we ever will.

In the big scheme of things, maybe the funny article isn’t so far off the mark? What will it take for online shopping to actually fulfill its promise in 2011 — and beyond? I’ll tackle that question in a later post.

Launched in August, 2000, RexBlog.com is the personal blog of Rex Hammock, founder/ceo of Hammock Inc., a customer media and marketing services company founded in 1991 in Nashville. Rex is also founder/helper-in-chief of SmallBusiness.com.(...)